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mall and medium-sized enterprises in economic development (Fernandez and Nieto, 2005).

Although in most countries, large enterprises generally play an important role in economic development, SMEs have been an essential component in the national economy of many countries. Compared with the large enterprises, SMEs have many advantages such as flexible operation, easy to adapt the change of the environment, and innovations; but they also have some disadvantages relative to large enterprises in resources and capabilities, management, talents, governmental support and technologies (Luczka, 2004). With the rapid development of SMEs, governments in many countries have gradually realized the importance of developing SMEs and adopted some measures to encourage the development of SMEs because governments know that SME is a phase of development of the enterprise and the emergence of the large enterprises is based on the development of SMEs (Laforet and Tann, 2006).

Similar to the status in many other countries, national economy of China is also dominated by some large state-owned enterprises. These large state-owned enterprises play an important position in the different industries of China and are supported by the government of China, while the development of SMEs has to face many difficulties compared with these large state-owned enterprises in China. But with the implementation of market economy and reform of state-owned enterprises, China’s government has greatly reduced the intervention on the behavior of enterprise. Upon this background, private enterprises are encouraged to develop. This greatly drives the development of small and medium-sized enterprises in China and SMEs are playing an increasingly important role in many industries of China (San and Zhu, 2003).

With the support and encouragement of the government, SMEs have achieved rapid development and growth in China and they have played an increasingly important role not only national economy of China but also in the society of China. But SMEs in China also face many problems during the process of their development such as strategic management, internal management and human resource management. With more and more Chinese enterprises including SMEs beginning to go international and Chinese market becoming more open to foreign enterprises, there have been higher requirements of the development of SMEs in China. These issues of strategic management, internal management and human resource management have been the important factors to limit the development of SMEs in China.

Although human resource management is not a new issue to most of enterprises in China, most of Chinese enterprises, especially SMEs, haven’t realized the important role of human resource management in their development and attached enough importance to this issue in their enterprises. In order to achieve the rapid growth, most of SMEs in China pay attention to production, sales and marketing, ad neglect the issues relating to management. In their opinions, the competition between enterprises is mainly focused on product, price and marketing, and human resource management is not an important issues to influence the competition between enterprises. But in fact, human resource management has been important for enterprises in the western developed countries, so it is meaningful for the author in this research to investigate issues relating to human resource management of SMEs in China.